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| 8-K - 8-K - GERMAN AMERICAN BANCORP, INC. | a8-kinvestorconference8x20.htm |
Symbol: GABC
August 2016
Keefe, Bruyette & Woods
Community Bank
Investor Conference
Presented By
Mark A. Schroeder
Chairman and CEO
Bradley M. Rust
Executive VP and CFO
2
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
When used in this presentation and our oral statements, the words or phrases “believe,” “will likely result,” “are
expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to
identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You
are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this
presentation, and we do not undertake any obligation to update any forward-looking statement to reflect circumstances
or events that occur in the future. By their nature, these statements are subject to numerous risks and uncertainties
that could cause actual results to differ materially from those anticipated in the statements.
Factors that could cause actual results and performance to vary materially from those expressed or implied by any
forward-looking statement include those that are discussed in Item 1, “Business – Forward Looking Statements and
Associated Risk,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for 2015 as updated and
supplemented by our other SEC reports filed from time to time.
3
NON-GAAP FINANCIAL MEASURES
These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a
numerical measure of the registrant’s historical or future financial performance, financial position or cash flows that
excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the
most directly comparable measure calculated and presented in accordance with GAAP in the statements of income,
balance sheet or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable
measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the
United States. Pursuant to the requirements of Regulation G, German American Bancorp, Inc. has provided
reconciliations within these slides, as necessary, of the non-GAAP financial measure to the most directly comparable
GAAP financial measure.
4
Southern Indiana
Community-focused
Financial Services
Organization
• $2.9 Billion Total Banking
Assets
• $504 Million Brokerage
Assets Under Management
• $56 Million Annual
Insurance Premiums
• Banking, Insurance,
Investments & Trust
• $529 Million Trust Assets
Under Management
Who We Are
• 600 FTEs
• 51 Branch Offices
Diversified Economic Base
Regional Education & Health Care
Life Sciences & Technology
Agriculture, Manufacturing & Logistics
MAJOR EMPLOYERS:
Education
Indiana University
University of Southern Indiana
Vincennes University
Greater Clark County School Corp
Evansville Vanderburgh County School Corp
Monroe County School Corporation
New Albany – Floyd County School Corp
Health Care
Indiana University Health
Columbus Regional Hospital
Clark Memorial Hospital
Deaconess Hospital
Floyd Memorial Hospital
Good Samaritan Hospital
Memorial Hospital
St Mary’s Medical Center
Manufacturing & Logistics
Aisin U.S.A. MFG, Inc.
ALCO Warrick Operations
Amazon Fulfillment Service
American Commercial Lines/Jeffboat
Berry Plastics
Cummins, Inc. (Cummins Diesel)
Jasper Engines & Transmissions
Kimball International, Inc.
Koch Enterprises, Inc.
MasterBrand Cabinets, Inc.
NTN Driveshaft Inc
OFS Brands (Office-Furniture Systems)
Toyota Motor Mfg – Indiana
5
Life Sciences & Technology
Baxter BioPharma Solutions
Crane Naval Surface Weapons Center
Cook Group, Inc.
Mead Johnson Nutrition
Energy
Duke Energy
Vectren
6
Small MSA Market Expansion
Market
Total Market
Deposits*
GABC Deposit
Market Share***
Market Share
Position
# of
Branches
Heritage Markets* $ 4,211,207 30% #1 27
Evansville/Newburgh $ 4,002,310 9% #3 6
Bloomington $ 2,044,647 8% #5 3
Columbus $ 1,101,423 1% #9 1
Louisville MSA
(Indiana Portion)**
$ 2,785,874 3% #11 5
Madison
(Jefferson County)
$ 483,142 56% #1 5
7
* Includes the Indiana counties of Daviess, Dubois, Gibson, Knox, Lawrence, Martin, Perry, Pike & Spencer
** Includes the Indiana counties of Clark & Floyd
Capitalize upon Market Strength & Growth
*** Source: FDIC 06/30/15 Statistics
*Heritage Markets 2015 2005
2015 # of
Offices
(millions) Deposits Share Deposits Share Increase
1 German American $ 1,257 29.8% $ 700 19.3% 79.6% 27
2 Old National Bank $ 929 22.0% $ 1,336 37.7% - 30.5% 17
3 Fifth Third Bank $ 465 11.0% $ 393 10.8% 18.3% 10
Market Total $ 4,211 $ 3,623 16.2%
8
Heritage Markets include the Indiana counties of Daviess, Dubois, Gibson, Knox, Lawrence, Martin, Perry, Pike & Spencer
* 2005 Deposits adjusted to include branches subsequently acquired by surviving banks
** Source: FDIC 06/30/15 Statistics
Capitalize upon Market Strength & Growth
History of Superior Financial Performance
9
2010 through 2015 Six Years of Consecutive Record Earnings
Performance
Double-Digit Return on Equity for Past 11 Consecutive Fiscal
Years (13%+ROE 2012 through 2014)
2009 through 2011 and 2013 through 2015 Highest
Performing (Return on Equity) among Indiana-Domiciled
Exchange-Traded Financial Institutions (Second Highest
Performing in 2012)
Consistent Achievement of Superior Asset Quality
Financial Trends
10
$20,249
$24,055
$25,413
$28,344
$30,064
$14,631 $14,934
$17,546
$1.61
$1.90
$1.98
$2.14
$2.27
$1.10
$1.02
$1.20
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/15
YTD
6/30/16
YTD
6/30/16
YTD *
(Dollars in Thousands)
Net Income & Earnings Per Share
Earnings Per Share
11 *Excludes merger related expenses incurred in 2016. Refer to slide 31 for further information
$1,874
$2,006
$2,164 $2,237
$2,374
$2,916
1.11%
1.24% 1.25%
1.31% 1.33%
1.10%
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/16
YTD
(Dollars in Thousands)
Total Assets
Annualized Return on Assets
12
$1,121
$1,205
$1,382
$1,448
$1,564
$1,961
81%
83%
81% 81% 82% 81%
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/16
YTD
(Dollars in Millions)
Total Loans, Net of Unearned Income
Commercial & Agricultural Loans as % of Total Loans
13
Construction & Development
Loans, $ 55.2 million, 3%
Agricultural Loans,
$ 285.5 million, 15%
Multi-Family
Residential
Properties,
$ 124.6 million, 6%
Commercial Real Estate Non-
Owner Occupied,
$ 470.8 million, 24%
Commercial Real Estate Owner
Occupied, $ 203.6 million, 10%
Commercial & Industrial Loans,
$ 458.8 million, 24%
Consumer Loans,
$ 43.4 million, 2%
Home Equity Loans,
$124.6 million, 6%
Residential Mortgage Loans,
$ 194.1 million, 10%
Total Loans $1,960.6 million
Loan Portfolio Composition As of June 30, 2016
14
1.08%
0.60%
0.44%
0.29%
0.15%
0.33%
3.08%
2.15%
1.45%
1.04%
0.89% 0.83%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 06/30/16
Non- Performing Assets to Total Assets
GABC Peer Group 15 * Peer Group Information as of 3/31/16
*
0.43%
0.19%
0.10%
-0.01%
0.03%
0.04%
0.88%
0.59%
0.25%
0.15%
0.08%
0.07%
-0.05%
0.20%
0.45%
0.70%
0.95%
1.20%
1.45%
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 06/30/16
Net Charge-offs to Average Loans
GABC Peer Group 16 * Peer Group Information as of 3/31/16
*
$1,556
$1,641
$1,812 $1,780 $1,826
$2,277
76%
80% 81% 81%
83% 83%
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
$2,600
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 06/30/16
(Dollars in Millions)
Total Deposits
Non-Maturity Deposit Accounts as % of Total Deposits
17
Non-Interest Bearing Demand,
$506.5 million, 22%
Interest Bearing Demand,
Savings & Money Market,
$1,380.1 million, 61%
Time Deposits, $390.8 million,
17%
18
Total Deposit Composition as of June 30, 2016
Cost of Funds
2011 0.95%
2012 0.60%
2013 0.37%
2014 0.30%
2015 0.28%
6/30/16 YTD 0.32%
Total Deposits $2,277.4 million
$168
$185
$200
$229
$252
$332
12.67% 13.57% 13.40% 13.21%
12.47%
9.79%
$-
$50
$100
$150
$200
$250
$300
$350
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/16
YTD
(Dollars in Millions)
Total Shareholders’ Equity
Annualized Return on Equity
19
$65,202
$67,819
$70,319
$76,991
$79,072
$38,882
$47,602
3.84%
3.74%
3.67%
3.76%
3.70% 3.72%
3.75%
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/15
YTD
6/30/16
YTD
(Dollars in Thousands)
Net Interest Income (Tax-Equivalent)
Net Interest Margin
20
$21,576 $21,811
$23,615 $23,937
$27,444
$13,263
$15,272
25%
24%
25%
24%
26%
25% 24%
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/15
YTD
6/30/16
YTD
(Dollars in Thousands)
Non-Interest Income
Non-Interest Income as % of Total Revenue
21
$50,782 $50,923
$54,905
$57,713
$61,326
$29,148
$38,579
$34,450
58.5%
56.8%
58.5%
57.2% 57.6%
55.9%
61.4%
54.8%
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/15
YTD
6/30/16
YTD
6/30/16
YTD*
(Dollars in Thousands)
Non-Interest Expense
Efficiency Ratio
22
*Excludes merger related expenses incurred in 2016. Refer to slide 31 for further information
$20,249
$24,055
$25,413
$28,344
$30,064
$14,631 $14,934
$17,546
$1.61
$1.90
$1.98
$2.14
$2.27
$1.10
$1.02
$1.20
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/15
YTD
6/30/16
YTD
6/30/16
YTD *
(Dollars in Thousands)
Net Income & Earnings Per Share
Earnings Per Share
23 *Excludes merger related expenses incurred in 2016. Refer to slide 31 for further information
Why Invest in GABC?
24
11.56%
10.04%
12.84%
11.12% 11.18%
12.67%
13.57%
13.40% 13.21%
12.47%
GABC Return on Shareholders’ Equity
Why Invest in GABC?
25 As of 12/31 for years shown
$0.93 $0.85
$1.16 $1.10
$1.21
$1.61
$1.90 $1.98
$2.14
$2.27
GABC Earnings Per Share Growth
26 As of 12/31 for years shown
Why Invest in GABC?
$9.14
$9.82
$11.47
$12.94
$13.38
$15.60
$17.36
GABC Tangible Book Value Per Share
Why Invest in GABC?
As of 12/31 for years shown 27
$16.25
$18.42 $18.19
$21.72
$28.42
$30.52
$33.32
GABC Stock Price Appreciation
Why Invest in GABC?
As of 12/31 for years shown 28
Focus on increasing long-term institutional ownership
• Proven Executive Management Team
• Track Record of Consistent Top Quartile Financial Performance
• Experienced in Operating Plan Execution and M & A
Transitions
• Potential Growth within New Market Areas – Small MSA Focus
• Existing Platform for Operating Efficiency
• Infrastructure in Place for Perpetuating Ongoing EPS Growth
and Tangible Book Value per Share Growth
• Consistent Strong Dividend Yield and Dividend Pay-out
Capacity
Why Invest in GABC?
29
2015
ROE
≥ 12%
3 Institutions
(including
German American)
Source: SNL Financial. Financial data is as of December 31, 2015.
All U.S. Exchange-Traded Depositories
422
Institutions
ROE ≥ 10%
for the past 10 years
11
Institutions
Consecutive
increases
in EPS for
past 5 years
3
Institutions
30
Why Invest
in GABC?
31
German American Bancorp, Inc.
Non-GAAP Disclosure Reconciliation
These materials contain certain financial measures determined by methods other than in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). The slide presentation furnished herewith uses the non -GAAP
financial measures of net income, fully diluted earnings per share, non-interest expenses and efficiency ratio excluding merger
expenses incurred in the first six months of 2016 related to the River Valley Bancorp merger. The Corporation believes that these
non-GAAP financial measures presented with these adjustments best reflects the Corporation’s ongoing performance and business
operations during the periods presented and is useful to investors for comparative purposes.
The following tables reconcile Net Income, Fully Diluted EPS, Non-Interest Expenses and Efficiency Ratio (dollars in thousands except per share data):
Six Month Ended EPS
6/30/2016 Impact
Net Income, as reported Six Months Ended 6/30/2016 14,934$ 1.02$
Merger Related Expenses, Net of Tax 2,612 0.18
Net Income, as adjusted 17,546$ 1.20$
Net Income, as reported Six Months Ended 6/30/2015 14,631$ 1.10$
Difference 2,915$ 0.10$
Fully Diluted Weighted Average Shares Outstanding, as reported Six Months Ended 6/30/2016 14,593,076
Six Months Ended
6/30/2016
Non-interest Expense, as reported Six Months Ended 6/30/2016 38,579$
Merger Related Expenses (4,129)
Non-interest Expense, as adjusted 34,450$
Non-interest Expense, as reported Six Months ended 6/30/2015 29,148$
Difference 5,302$
Six Months Ended
6/30/2016
Efficiency R ti , reported Six Months Ended 6/30/2016 61.4%
Merger Related Expenses impact on Efficiency Ratio 6.6%
Efficency Ratio, as adjusted 54.8%
Non-interest Expense, as reported Six Months Ended 6/30/2015 55.9%
Difference -1.1%
Mark A. Schroeder, Chairman and CEO
(812) 482-0701
mark.schroeder@germanamerican.com
32
Bradley M. Rust, Executive VP and CEO
(812) 482-0718
brad.rust@germanamerican.com